FIG. 1 is a block diagram of an academic health center (AHC) or an academic clinical enterprise having as participants a school of medicine 12, a hospital 14 and a faculty practice plan 16. The AHC 10 allows for the advancement of medical knowledge, providing medical care to patients and preparing medical students. The AHC 10 allows each participant to perform their given tasks with support from the other participants. For example, since a school of medicine 12 can only provide a limited education to its students, the students must rely on the doctors and hospital 14 to provide real life training.
Although each participant in an AHC interacts with and relies on the other participants, there is no proper method to account for and determine the value of these partnerships and relationships in monetary measures. Without proper accounting, the participants cannot properly compare the cost and benefits each receives as part of the AHC 10. Similarly, it is difficult to compare the efficiency of a department within a participant. For example, a hospital cannot measure the efficiency of its orthopedics department with the ophthalmology department. Without proper accounting, a hospital cannot compare the efficiency of its orthopedics department with other orthopedic departments located at different hospitals in other AHC's.
One of the reasons for such problems is that each participant has its own accounting system thus each participant treats costs differently. Moreover, even if the participants use the same accounting system, the participants still cannot make realistic comparisons because the participants do not typically define transactions and measures in the same manner, nor do they account for hidden costs or income such as service and benefits which they receive for free from another participant. Without a shared accounting system which properly accounts for each transaction, whether it is a cash or non-cash transaction, the participants cannot use meaningful benchmarking procedures to determine how a department within a participant or a participant is operating.